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Retailers rallying, but consultant sees a big problem ahead

The retail rebound

Department stores may be rallying this week, but there is a "big problem" ahead in the form of Amazon, retail consultant Jan Kniffen said Friday.

That's because right now Amazon only has 3 percent of retail sales but 50 percent of the growth in sales, he told CNBC's "Power Lunch."

"We are going to see 50 percent of sales online, non-bar, non-restaurant, by 2030," said Kniffen, a CNBC contributor.

Matthew Boss, equity research analyst for JPMorgan, believes that right now there is a balance of power playing out with the retailers.

"The reality is it comes down to the brands," he told "Power Lunch."

Smaller, regional players will be losers and Macy's may become more of a destination, he noted.

"They are all trying to battle with Amazon," said Boss.

Amazon shipping center in Schertz, Texas
Robert Daemmrich Photography | Corbis | Getty Images

Retailers have been struggling but saw a boost this week, with Macy's and Nordstrom both rallying after reporting earnings on Thursday that beat Wall Street estimates. On Friday, J.C. Penney reported a smaller-than-expected loss. Shares were up about 7 percent in midday trading.

"The theme this week from the department stores was less bad," Boss said.

"Every single one of the department stores on the top line improved roughly 2 to 3 percent versus the first quarter. You had the warmest winter in history this past fall and winter followed by an atrocious first quarter where they had excess inventory," he added.

Therefore, if the department stores can continue to show sequential improvement, he thinks stocks will follow.

Kniffen is also expecting improvement in the back half of the year. However, he called July's retail sales numbers "worrisome."

Those sales were unexpectedly flat for the month.

"If this is not a blip, this could be a problem," Kniffen said. "I don't think the consumer is that strong. I don't think the economy is that strong."

Disclosures: Macy's, J.C. Penney's and Nordstrom are investment banking clients of JPMorgan. JPMorgan Securities plc and/or an affiliate is a market maker and/or liquidity provider in securities issued by Nordstrom, Inc., J.C. Penney Co., Inc., Macy's Inc. JPMorgan current'y has, or had within the past 12 months, the following entities as clients, and the services provided were non-investment banking, securities-related: Macy's, J.C. Penney, Nordstrom.